Additional Voluntary Contributions
What are Additional Voluntary Contributions (AVCs)?
Pension plan members may make tax deductible additional voluntary contributions (AVC) to their account under the pension plan which are over and above their required contributions. Additional voluntary contributions are NOT matched by the school board.
What are the limits?
You can make an AVC, however the sum of your required contributions , the school boards matching contributions, and your AVCs cannot exceend the lesser of:
- 18% of your salary, or
- The Money Purchase Limit as prescribed in the Income Tax Act (Canada).
The Money Purchase Limit in 2017 is $26,230 (2016 was $26,010). This limit is reviewed annually and indexed.
Why would I make an AVC?
Financial planning for your retirement is a personal matter. An AVC could be one other option for increasing your retirement income.
- AVCs are invested in an identical manner to your regular account and are not subject to investment manager fees while an active member of the pension plan as these are paid by school divisions.
- Contributions are made through payroll deduction.
- You can increase your retirement income on a tax effective basis.
Disadvantages (as compared to an RRSP contribution)
- The investment direction for the pension fund is geared to the long term with a blend of equity and fixed income investments and may not be consistent with a member's investment objectives and risk tolerance.
- With an RRSP you can tailor investments to meet changing needs particularly as a member approaches retirement.
- RRSP contributions are available for other uses as the Home Buyer's Plan and Lifelong Learning Plan.
- Voluntary contributions cannot be accessed for an emergency until the time of retirement, termination of employment with the school division or the member's death.
How do I make AVCs?
AVCs are deducted from your salary up to the permitted limits under Canada Revenue Agency (CRA).
To make an AVC contact the payroll department of your school division.
Deductions will only commence at the beginning of any calendar year and can be stopped at any time by the plan member giving adequate notice to the division payroll office.
Please see the Plan Summary document elsewhere on the website for further information regarding required and voluntary contributions, as well as other plan provisions.